Motley Fool Money Reminder: The Chip Biz is Cyclical
Apr 17, 2024
Tim Beyers, a savvy analyst from Motley Fool, dives into the cyclical nature of the chip industry, revealing a slowdown in investments as ASML faces declining revenue. He also discusses United Airlines' promising quarterly results despite some fleet challenges from Boeing. The conversation touches on how these trends intertwine with the broader market and what enterprise software companies might reveal in their upcoming reports. In a related chat, Deidre Woollard speaks with Steven Jacobs about the current state of the commercial real estate market, especially regarding office space challenges.
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Chip Industry Slowdown
- ASML, a key supplier of chip-making machines, saw a 22% drop in revenue, suggesting a slowdown in chip manufacturing investment.
- This slowdown may be due to capacity planning and a potential decrease in demand for AI hardware in the coming years.
ASML Sales Trends
- ASML's sales are lumpy due to the low volume of high-cost machines sold and the long-term planning involved in chip manufacturing.
- Half of ASML's sales went to China, highlighting China's focus on domestic chip production.
United Airlines' Success
- United Airlines reported strong Q1 2024 results, with increased revenue and improved efficiency metrics.
- The airline's success is driven by the resurgence of passenger travel, particularly internationally.